Artist Management and the Contract

Personal managers play a very significant role in the lives and careers of artists. This article will explain that role briefly, and will discuss important issues to be addressed when developing an agreement between an artist and manager.

The manager’s primary job is to serve as a liaison between the artist and the groups or individuals with whom the artist will deal. In the music industry, these groups and individuals would include the artist’s record label, publishing company, booking agent, business manager, etc. Also, the manager usually has experience in the business aspects of the music industry that can help to guide the artist in his or her career and in handling day-to-day administrative needs. Typically, a manager will advise the artist in matters related to marketing, publicity, promotion, employment and image.

When an artist and manager decide they want to work together, they usually will enter into written contract. The purpose of a written management agreement is to define the relationship between the artist and manager, and to outline the roles of each party in that relationship. Some artists and managers claim to have such good working relationships that a written agreement is unnecessary. These types of arrangements can be successful. However, a contract still is recommended because it allows the parties to outline and define their business relationship in writing. This helps to avoid disagreements or discrepancies that may arise later if the parties cannot remember exactly what their agreement was.

Before a manager and artist sign the written agreement the parties usually negotiate important issues that each party feels needs to be addressed in the contract. Negotiation is a process of discussion to determine each party’s needs and concerns; successful negotiations always are based on compromise and solutions. Therefore, when parties begin to negotiate an agreement, they should not view the process as adversarial. Instead, they should look upon the process as a puzzle they are attempting to solve. Just because one party has a question or concern does not mean he or she is resistant. In fact, most often, he or she is just seeking some assurance. Rather than viewing the other party’s needs and suggestions as a problem, negotiating parties should work to develop alternative, creative ideas and rational solutions that meet both party’s needs. In most cases, such dialogue will not only resolve issues, but will help the parties to understand the other better.

Believe it or not, many contract negotiations fail to establish productive relationships because one or both parties is unwilling to discuss its needs and desires for fear of looking weak. If an artist says to a manager, “I want you to make me a mega star in one year”, but the manager is incapable of achieving that goal, the manager should discuss his goals and abilities with the artist immediately. Otherwise, the parties may end up going through a lengthy negotiation process and sign a contract, only to have the relationship fail a year later because the manager thinks artist is unrealistic and wasting the manager’s time, and the artist thinks the manager is incompetent.

The most important issues to be addressed in the contract are

the term, or time frame, of the agreement,

the services to, and/or responsibilities of, each of the parties,

compensation to each party, and payment of expenses, and

the authority of the manager.

The Term of the Agreement

During the negotiation process, the parties should discuss the term of the agreement how long it will last between them and if the contract will extend on a regular basis. The manager will need time, and sometimes his or her own money, to develop the artist to the point that the artist can pay the manager for his or her time and expenses. The artist should understand this and be realistic. The manager obviously sees potential in the artist enough to make a commitment of his or her own resources and should have a vision or plan for achieving the artist’s goals. However, it may more than one year for the artist to develop into that mega star. The agreement should allow the manager a reasonable opportunity to meet the artist’s objectives. Of course, if the manager is not performing his duties and/or producing the success promised or expected, the artist should be able to terminate the contract within a reasonable period of time. Given these issues, a typical contract term is one to three years. Any option to extend the agreement should be mutual after this time.

The Duties and Responsibilities

One way to facilitate the success of a partnership is to negotiate the responsibilities and duties each party in the agreement to be signed. For instance, it might be included that the manager agrees to counsel and advise the artist in his or her career, and to handle the artist’s administrative needs. The artist may simply agree to be available, when called upon to do so by the manager, to perform his or her functions as an artist within the industry. Of course, the parties could be more elaborate and include specific duties of the manager, along with detailed performance clauses. One example would be to specifically state:

“The Manager shall assist the Artist with respect to the selection, supervision and coordination of those persons, firms and corporations who may counsel, advise, procure employment, or otherwise render services to or on behalf of Artist, such as accountants, attorneys, business managers, publicists and talent agents.”

Sometimes, performance can be measured only in dollars, so performance clauses may obligate the manager to assure that the artist makes a certain amount of money each year. So long as the artist’s income increases by the specified percentage each year, the manager can continue to exercise options to extend the term of the contract. However, some managers will be reluctant to place specific duties in the contract, for fear that a disagreement might arise over the way the manager performed a duty. Even if the manager succeeded in achieving the artist’s objectives, if he or she used methods not specific to the contractual language, he or she could be sued by the artist for breach of contract.

The Manager’s Compensation and Payment of Expenses

Not surprisingly, the terms of an artist-manager agreement that are most frequently argued about are 1) how much will the manager be paid? 2) in what form will the manager will be compensated? (3) who will pay for the expenses? Conflicts sometimes arise when the band views the manager as simply taking a percentage of their earnings. In fact, artists do not have to hire managers. Manager are employed by the artist to perform a service, and an effective manager one who helps the artist to make money and become more successful should paid accordingly. Because the success of the artist usually is measured in dollar amounts, the manager will take a percentage of what the artist makes. Ultimately, a band should never think the manager is taking money from them. They should consider that everyone is working as a team for the success of the business, with each person taking on a specific role. Without the manager, the band would not have as much income to distribute.

To limit disputes later, the agreement should specifically set forth what percentage the manager will receive from the artist’s income, and from which income sources this percentage will be calculated. It is typical for a manager to receive 10 to 20 percent of the artist’s gross income from all sources (e.g., recording, performing, songwriting, merchandise, etc.). The manager is helping to develop and exploit the artist’s talents in these categories and should be compensated for that work. To reduce discrepancies, each category should be specifically listed and defined in the agreement so that all parties will understand.

Article contributed by J. Scott “Skip” Rudsenske and James P. Denk

Pluto Rock Rol Time Is Money Entertainment (PRR-TIME)

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